UK Online Spending Jumped 7% in February to £8.4 Billion, as Food Prices Rise 3.7%
New data from the Adobe Digital Economy Index, which analyses tens of billions of transactions, has revealed that UK shoppers spent £8.4 billion online in February 2023, a 7.0% increase on the previous month, with spending pushed up by a 3.7% rise in online food prices. Despite this monthly increase, spending was down 7.4% on the previous year, due to the economic squeeze caused by the current cost-of-living crisis.
As consumers prepared for Valentine’s Day, products such as shoulder bags, cashmere jumpers, candlesticks, men’s blazers and suits, women’s dresses and flowers were all popular purchases this month. Demand for home goods was also high as products including lamps, area rugs, desks and bedding saw increased sales momentum.
Adobe Analytics also identified a further increase in the use of Buy Now Pay Later (BNPL) services, as consumers continue to spread the cost of purchases across multiple months. Buy Now Pay Later was used in 14% of online purchases in February, up from 12% the previous month and 11% the year prior as consumers try to ease the pressure on their finances. The steady increase of BNPL use has now led the UK Government to consult on new draft legislation that will bring these services into Financial Conduct Authority regulation, offering greater protection for the growing number of consumers who use them.
The data also revealed that BNPL is being used to finance larger purchases, with the average order value for BNPL orders for January and February growing by 4% year-over-year.
“The resilience of the digital economy is a positive sign for UK businesses and for consumers, who are increasingly turning to their mobile devices to shop quickly and conveniently on the move. However, further increases in the use of Buy Now Pay Later services suggests that the effects of high inflation and rising bills are hitting consumers hard, causing them to turn to unsecured credit facilities to manage the increasing costs of purchases.”
Suzanne Steele, Vice President and Managing Director for Adobe in the UK
Despite the year-on-year decline in online spending, the big picture still shows a continuous shift towards the digital economy with UK consumers spending 34.8% more on online purchases compared to February 2020, a healthy 10.5% annualised growth rate over the last three years. And with monthly online spend now appearing to accelerate, there are positive signs on the economic horizon that support the Bank of England’s recent comments that ‘the current momentum in economic activity may be slightly stronger than anticipated’.
Mobile growing double digits
The trend towards mobile shopping is continuing at pace, with February seeing even more spending coming from the palm of consumers’ hands – with 3 in 5 (60.4%) of purchases taking place on smartphones, representing a 9.9% YoY increase in share.
Overall, consumers spent £5.1 billion with their mobile devices in the second and shortest month of the year.
Consumers opt for Click and Collect as many return to offices
This fulfilment method was used in 8.9% of online orders in February, up from 8.2% the previous month – which could suggest that more people are using this fulfilment method to avoid missed deliveries as they return to offices.
Adobe Digital Economy Index
The Adobe Digital Economy Index (DEI) used Adobe Analytics to analyse tens-of-billions of visits to retail sites from UK consumers, 100 million SKUs, and 18 product categories in the period February 1st to February 28th 2023, to provide the most comprehensive view of the UK digital economy. Adobe Analytics is part of Adobe Experience Cloud, relied upon by major retailers to deliver, measure, and personalise shopping experiences online.
Global figures are based on analysis of over a trillion visits to ecommerce sites and direct transaction data of consumers from over 80 countries – more than any other technology company or research firm.
Find out more about the Digital Economy Index here.